© Reuters. FILE PHOTO: The Central Business District (CBD) skyline is pictured at sunset in Sydney, Australia, June 4, 2021. REUTERS/Loren Elliott
SYDNEY (Reuters) – Australia’s Treasurer Jim Chalmers said on Sunday that stubbornly-high inflation in the country has likely peaked, but conceded it remains a big economic challenge.
Inflation is running at a 32-year high of 7.8% is only expected to slow to the top of the Reserve Bank of Australia (RBA)’s target range of 2-3% by mid-2025.
Speaking from India, where he has been attending the G20 financial leaders’ meet in Bengalaru, Chalmers said the global economy was on an “incredibly narrow path” with “the inflation challenge on one side, and a big global downturn on the other”.
“Everybody here is trying to navigate that narrow and perilous path, we do have a big inflation problem in the global economy and in our own economy,” Chalmers told Sky News television, according to a government transcript.
“Even though the peak of inflation is likely to be behind us, it will still be higher than we’d like for longer than we’d like,” he said, citing the conflict in Ukraine as a key driver.
The RBA has recently revised up its forecasts for core inflation and wage growth, and warned further hikes in interest rates would be needed to head off a damaging wage-price spiral.
Australia’s central bank this month lifted its cash rate for a ninth straight time to a decade-high of 3.35%, taking total tightening since last May to 325 basis points, in a bid to curb surging prices.
Inflation was the “defining challenge” in the Australian and global economy, said Chalmers, who warned against complacency.
“At some future point, the focus will shift from inflation to growth, but for the time being inflation is the main game. It’s true of the world and it’s true of us.”